Sergei Bakeshin has assessed the first six months of the personal bankruptcy procedure out-of-court

Sergei Bakeshin - Senior Associate

In September 2020 Russia launched a simplified procedure of personal bankruptcy. Individuals who owed between 50,000 and 500,000 roubles got an opportunity to initiate their personal bankruptcy out of court by filing an application in one of multifunctional centers ( a public institutions in Russia that provide state and municipal services on a one-stop-shop basis).

“This mechanism is designed for citizens who have relatively small debts and no property that can be foreclosed on. Many of them may be clients of microfinance organisations,” Sergei Bakeshin, head of dispute resolution and insolvency practice at Maxima Legal, explained for the international online project.

According to data of the Unified federal register of bankruptcy information, about 8,000 people used the procedure in first six months, but only one third of applications were satisfied. Reasons for refusal could be giving false information about the amount of debt, existence of enforcement proceedings opened against the debtor as well as property donation or salary increase.

Sergei Bakeshin, noted that despite the fact that “the total number of filed applications is significantly lower than expected, growth potential is definitely not exhausted, so out-of-court bankruptcy procedure can still help somebody get rid of debts”.

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